- [Narrator] Chipotle's
menu only has a few items, but it's highly customizable. Born in 1993, that's what's made Chipotle one of the most successful fast casual restaurant chains in the U.S. But in recent years, Chipotle's
faced many challenges. Between 2015 to 2018, Chipotle dealt with five
foodborne illness outbreaks. Like most of the restaurant industry, Chipotle's revenue took a big hit during the beginning of
the Coronavirus pandemic. And today it's dealing with inflation that's increased labor,
transportation, and food costs. Yet despite these setbacks, Chipotle's sales are actually growing. Here's how Chipotle's focus
on efficiency and innovation helped it bounce back and
become one of the country's most valuable quick service chains. This is "The Economics of Chipotle." Chipotle's revenue has
increased by more than 200% over the past decade. Its stock price has increased about 400% in the last five years. Much of Chipotle's success
comes from its efficient and what it calls "transparent"
in-store experience. - Chipotle has really, in a lot of ways, made the whole fast casual
category for restaurants. It's not fast food, it's not full service. They've generated a lot of sales from people who want this alternative that's seems fresher and
faster than fast food, but is not a full service experience. Fast casual design can help them reduce some of their labor expenses,
which helps with profits. - [Narrator] Chipotle's
menu is relatively small but it's easy to customize. - There's tons of stuff
you can put on your meal. That's proteins, that's
cheeses, that's vegetables, that's all the salsas and sauces. And for a customer that makes it exciting. You know, they get lots
of different things they can customize their meal with. The more limited menu in general is better for restaurants
and their profits. It's less things to train
the restaurant workers on. It's less waste. - [Narrator] Chipotle's founder Steve Ells emphasized having an open kitchen. He wanted customers to be
able to see the ingredients and preparation in front of them. Today, employees work
at individual stations to serve already-prepared ingredients, making the ordering process
more efficient for customers. - We can serve as many as 100 customers within a 15-minute period. What's a better way than
telling people that it's fresh? Showing them. Let them come in and
discover for themselves. - [Narrator] This transparency
has been very important for Chipotle, especially
after its food safety issues. After several outbreaks
of E. coli, Salmonella, and Norovirus in Chipotle restaurants, the company implemented several changes like improving food preparation
and storage procedures, encouraging sick
employees to stay at home, and bringing on a new CEO, Brian Niccol. - He really did emphasize that they cleaned up their procedures. Didn't happen immediately. But with time, people
start to forget things too. There hasn't been the
big high-profile scares that there were previously. - [Narrator] After several
outbreaks between 2015 and 2018, Chipotle's stock price took a hit. However, its focus on its
digital ordering platforms helped drive up revenue and
stock prices started to climb. Back in 2008, Chipotle
became one of the first fast casual chains to create
an online store pickup model. In its first year,
Chipotle's digital sales accounted for $13 million, or
just 1% of its total sales. In 2022, digital sales
grew to $3.4 billion. That's now nearly 40% of Chipotle's food and beverage revenue. - If you're ordering online digitally, that is made for you at a whole separate part of the kitchen, which is just dedicated to online orders. - [Narrator] Chipotle's app
and online ordering systems were also vital during the pandemic. - The pandemic obviously was
terrible for all restaurants. But Chipotle did have
some advantages there in that they had this whole
digital ordering platform really set up and scaled beforehand. - When the pandemic first hit, we saw that people stopped
going to restaurants for some period of time. So we saw our sales drop
pretty significantly. But it only took, like, a week or two before we started to see that while they first stopped
visiting restaurants, the adoption of the digital ordering really picked up very, very quickly. And so I would say within
the first four weeks, we had our digital ordering
soar from about 18% to it at one point hit 70%. - [Narrator] Chipotle
also designed its stores to have two separate prep
stations called make lines. One make line is just for in-store orders, and the other is for
digital and catering orders. This made food pickups quicker for customers who didn't
want to spend time indoors. - This idea that we had
the digital make line so that as people were ordering, we could make food on
their digital make line, and also serve customers that
were choosing to come in. So it was a seamless experience. Like most stocks during 2020, they were still lower than
they were before the pandemic. But by the end of the first
year into the second year, most stocks had, you
know, fully recovered. We had our all time high in 2021. - [Narrator] Recently, Chipotle
has continued to expand its digital ordering services with a new pickup option for
customers called Chipotlanes. - Let's go ahead and
offer all the convenience of the drive-through, but
when you order ahead of time, you know exactly what time to
come, and so there's no line. You drive up and you pull to our window, you get your food, and off you go. - [Narrator] The first
Chipotlane opened in 2018, and there are already
nearly 600 across the U.S. Chipotle says at least 80%
of new restaurant locations opening in 2023 will have Chipotlanes. But that's just one
example of how Chipotle has continued to innovate
to attract customers. - Social media has been
great for us because in addition to making sure we're serving, you know, the meals that customers come to expect at Chipotle, we also want to be part of a culture. - [Narrator] Chipotle
frequently uses social media to attract younger consumers
by releasing recipe videos, animated short films, Roblox games, and social media campaigns like the lid flip challenge
with major influencers. Chipotle has also used social
media to drum up excitement about new menu items and
innovate its menu options to keep up with consumer trends. - Adding new things for customers is very important to Chipotle, and they have a whole process for this where they try and try
these items in-house and really test and learn
before they test in stores. They like Menu News,
whether it's, you know, a steak item or a chicken
item, Al Pastor, quesadillas. They want to keep customers interested, even if most of their
menu is staying the same. - [Narrator] So what's next for Chipotle? - In general, the online ordering, even when you pick it
up in the restaurant, is just much more efficient. - [Narrator] The company
says it wants to open more locations that are only
used for online pickup orders. They won't have any seating for customers. This will also cut down on labor costs, since workers won't need
to clean seating areas and bathrooms as often. - We think the idea is
let the customers choose which channel they want. Now our job is to make sure
every channel is convenient, it's easy, it's fast, so that we don't give
any friction whatsoever. But make sure every experience
that you can provide in every channel is a great one. (gentle music)
